Forest Laboratories, Inc. (NYSE: FRX), an international
pharmaceutical manufacturer and marketer, today announced that
reported earnings per share equaled $0.21 in the first quarter of
fiscal 2013. Reported earnings per share in the first quarter of
fiscal 2012 were $0.90 after a charge of $40.0 million or $0.14 per
share net of tax, related to a new product licensing agreement with
Blue Ash Therapeutics, LLC (Blue Ash) for azimilide, a novel
antiarrhythmic agent. Excluding acquisition related amortization in
both periods presented and the Blue Ash charge in last year’s first
quarter, non-GAAP EPS in the first fiscal quarter of 2013 equaled
$0.28 as compared with $1.07 in the first quarter of fiscal
2012.
Net sales for the quarter decreased 31.9% to $751.8 million,
from $1.1 billion in the year-ago period. Namenda® (memantine HCl),
an NMDA receptor antagonist for the treatment of moderate and
severe Alzheimer’s disease, recorded sales of $368.4 million during
the quarter, an increase of 15.2% from last year’s first quarter.
Sales of Bystolic® (nebivolol), a beta-blocker for the treatment of
hypertension, were $107.8 million, an increase of 38.2% over the
year-ago period. Sales of Savella® (milnacipran HCl), a selective
serotonin norepinephrine dual reuptake inhibitor (SNRI) for the
management of fibromyalgia, were $26.7 million, an increase of 3.5%
from last year’s first quarter. The Company commercially launched
two of its newest products, Daliresp® and Viibryd® in August 2011.
Daliresp (roflumilast), a PDE4 enzyme inhibitor for the treatment
to reduce the risk of exacerbations in patients with chronic
obstructive pulmonary disease (COPD) recorded sales of $17.8
million. Viibryd (vilazodone HCl), an SSRI and a partial agonist at
serotonergic 5-HT1A receptors for the treatment of adults with
major depressive disorder (MDD) recorded sales of $37.4 million.
Teflaro® (ceftaroline fosamil), a broad-spectrum bactericidal
cephalosporin antibiotic for the treatment of adults with
community-acquired bacterial pneumonia and with acute bacterial
skin and skin structure infections, recorded sales of $9.4 million.
Teflaro was commercially launched in March 2011. Sales of Lexapro®
(escitalopram oxalate), a selective serotonin reuptake inhibitor
(SSRI) for the initial and maintenance treatment of MDD in adults
and adolescents and generalized anxiety disorder in adults were
$110.0 million compared with $585.7 million in the year-ago period.
Patent protection for Lexapro expired on March 14, 2012.
Contract revenue was $65.8 million in the current quarter
compared to $40.6 million last year. Benicar® (olmesartan
medoxomil) co-promotion income totaled $35.4 million, a decrease of
$1.3 million compared to $36.7 million in last year’s first
quarter. Contract revenue also included $29.4 million of income in
the current quarter from a distribution agreement with Mylan, Inc.
(Mylan) pursuant to which Mylan is authorized to sell a generic
version of Lexapro and the Company retains a portion of the profits
from those sales.
Cost of sales as a percentage of sales was 22.4% compared with
23.0% in last year’s first quarter. Selling, general and
administrative expense for the current quarter was $382.3 million
as compared to $358.1 million in the year-ago quarter. The current
level of spending reflects the resources and activities we believe
are required to support our currently marketed products,
particularly our newest products: Teflaro, Daliresp and Viibryd and
the pre-approval commercial costs associated with aclidinium and
linaclotide.
Research and development (R&D) spending for the current
quarter was $195.2 million compared with $194.4 million in last
year’s first quarter. Excluding the $40.0 million payment to Blue
Ash in last year’s quarter, R&D would have increased by 26.4%.
Neither period included development milestone expenses.
Income tax expense for the quarter was $20.1 million, reflecting
a quarterly effective tax rate of 26.7%.
Reported net income for the quarter ended June 30, 2012 was
$55.3 million or $0.21 per share compared to $258.1 million or
$0.90 per share reported for last year’s first quarter.
Diluted shares outstanding at June 30, 2012 were approximately
268,972,000 a reduction of approximately 17.4 million shares
compared to the year-ago period primarily due to the Company’s
accelerated share repurchase programs.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “We have just completed our first fiscal quarter following
the loss of patent exclusivity for Lexapro. Our earnings guidance
for fiscal year 2013 reflects the impact of Lexapro’s patent expiry
and the operational strategies to offset this loss which were
initiated years ago. We have deliberately and strategically
diversified our product portfolio so that we would not be dependent
on any single product or therapeutic area. Today, we have nine new
products that have recently reached or which we expect to reach the
marketplace and there are more we have in development and more we
are evaluating to replace Lexapro and eventually Namenda when its
patent expires. We are pleased with the performance this quarter of
three of our most recent product launches, Teflaro, Daliresp and
Viibryd, which were introduced last year. It is still early days
for these products but they are performing well in-line with our
expectations. Two of our other promoted products, Bystolic and
Savella, also turned in solid performances during the quarter. It
is worth noting, that for the first time since launch, sales of
Bystolic exceeded $100 million in a calendar quarter, achieving
sales of $107.8 million, representing growth of 38.2% year over
year and 11.2% over last quarter. Collectively, our next generation
products, Bystolic, Savella, Teflaro, Daliresp and Viibryd had
sales of $200 million in the quarter, representing 63% growth in
comparison to the comparable prior year quarter.
We expect to hear from the U.S. Food and Drug Administration
(FDA) in the coming weeks regarding the approval status of
aclidinium for the long-term maintenance treatment of COPD and
later this summer we expect to hear on the approval status of
linaclotide for the treatment of irritable bowel syndrome with
constipation (IBS-C) and chronic constipation (CC). Assuming
approval for both products we will have two new product launches
during fiscal 2013.
During the quarter we and our partner Pierre Fabre were pleased
to report positive top-line Phase III clinical trial results for
levomilnacipran for the treatment of major depressive disorder.
With the clinical development program now completed we can move
forward with this New Drug Application (NDA) filing which we expect
to submit to the FDA in the coming months. We are also on track to
file the NDA for cariprazine for the treatment of schizophrenia and
acute mania associated with bipolar 1 disorder, during the fourth
calendar quarter of 2012. Assuming their respective regulatory
approvals in calendar 2013, we expect to launch levomilnacipran and
cariprazine during fiscal 2014, which would bring us to nine new
product launches since the beginning of calendar 2008.
Early last month we announced an agreement with Nabriva
Therapeutics for the development of Nabriva’s novel antibacterial
agent, BC-3781 which belongs to a novel class of antibiotics, the
pleuromutilins. We paid Nabriva an upfront fee of $25 million upon
the expiration of the Hart-Scott waiting period and will fund and
conduct certain development activities for BC-3781 over the next 12
months. During the 12-month period we have the exclusive right to
acquire Nabriva dependent upon certain contingencies.
Over the last five years, we received six product approvals in
seven different indications. Our track record of new product
development compares favorably to our specialty-pharma peers, as
well as many of the industry’s largest companies. We have one of
the strongest and most diverse product portfolios and pipelines in
the industry, in large part due to our strong core competency in
our key therapeutic focus areas and our status as a partner of
choice, as evidenced by our numerous repeat collaborations. I am
confident that our corporate strategy is sound and we are in a
great position to succeed well into the future.”
Use of Non-GAAP Financial
Information
Non-GAAP earnings per share information adjusted to exclude
certain costs, expenses and other specified items as summarized in
the table below. This information is intended to enhance an
investor’s overall understanding of the Company’s past financial
performance and prospects for the future. This information is not
intended to be considered in isolation or as a substitute for
earnings per share prepared in accordance with GAAP.
FOREST LABORATORIES, INC. AND
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL
INFORMATION
THREE MONTHS ENDED
JUNE 30
2012
2011
Reported diluted earnings per share: $0.21 $0.90 Specified
items, per share, net of tax:
Amortization arising from business
combinations
and acquisitions of product
rights
0.07 0.03
Licensing payment to Blue Ash
Therapeutics, LLC
for azimilide
0.14
Adjusted Non-GAAP diluted earnings
per
share:
$0.28 $1.07
Forest will host a conference call at 10:00 AM EDT today to
discuss the results. The conference call will be webcast live on
the Company’s website at www.frx.com and also on the website
www.streetevents.com. Please log on to either website at least
fifteen minutes prior to the conference call as it may be necessary
to download software to access the call. A replay of the conference
call will be available until August 16, 2012 at both websites and
also by dialing (855) 859-2056 (US and Canada) or +1 404 537-3406
(international), Conference ID: 94325322.
About Forest Laboratories and Its
Products
Forest Laboratories’ (NYSE: FRX) longstanding global
partnerships and track record developing and marketing
pharmaceutical products in the United States have yielded its
well-established central nervous system and cardiovascular
franchises and innovations in anti-infective, respiratory,
gastrointestinal, and pain management medicine. The Company’s
pipeline, the most robust in its history, includes product
candidates in all stages of development across a wide range of
therapeutic areas. The Company is headquartered in New York, NY. To
learn more, visit www.FRX.com.
Except for the historical information contained herein, this
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks and uncertainties, including
the difficulty of predicting FDA approvals, the acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, the timely development and launch of new
products, and the risk factors listed from time to time in Forest
Laboratories’ Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and any subsequent SEC filings. Forest assumes no obligation
to update forward-looking statements contained in this release to
reflect new information or future events or developments.
FOREST LABORATORIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
(In thousands, except per share
amounts)
THREE MONTHS
ENDED JUNE 30
2012
2011
Revenues: Net sales $ 751,766 $ 1,104,135 Contract revenue
65,835 40,639 Interest income and other
3,526
7,157 Net revenues
821,127 1,151,931 Costs
and expenses: Cost of goods sold 168,223 253,797 Selling,
general and administrative 382,309 358,077 Research and development
195,166 194,443
745,698 806,317 Income
before income tax expense 75,429 345,614 Income tax expense
20,144 87,477 Net
income $ 55,285 $
258,137 Net income per share: Basic
$0.21 $0.90 Diluted
$0.21
$0.90 Weighted average number of shares
outstanding: Basic
268,389
285,801 Diluted
268,972
286,375
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